Demand Forecasting, Planning, and Management

[Pages:39]Demand Forecasting, Planning, and Management

Lecture to 2007 MLOG Class September 27, 2006

Larry Lapide, Ph.D. Research Director, MIT-CTL

Larry Lapide, 2006 Page 1

What Are Demand Forecasting, Planning, and Management?

What should we do to shape and create demand?

Demand Planning

What will demand be for a given demand plan?

Demand Forecasting

How do we prepare for and act on demand when

it comes in?

Demand Management

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Agenda

? Industry Trends ? Demand forecasting

? Process ? Methods ? Demand planning (with supply in mind) ? Demand management

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Industry Trends ? Movement From Push to Pull Manufacturing

Suppliers

Manufacturers

Distributors/ Wholesalers

Retailers

Consumers

Suppliers

Manufacturers

Distributors/ Wholesalers

Retailers

Consumers

Make what we will sell, not sell what we make! Figure by MIT OCW.

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Now Moving to Demand-Driven and "Commercialized" Supply Chains

Aligning supply and demand plans to helps ensure optimized profitability

Demand Planning

Inventory Planning

Production/ Planning

Production/ Scheduling

Procurement Planning

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Agenda

? Industry Trends ? Demand forecasting

? Process ? Methods ? Demand planning (with supply in mind) ? Demand management

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A Business Needs a Forecast of What Might Happen, Not Just a Real-time View

Image from comic strip removed due to copyright restrictions.

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Why Do Companies Need to Forecast?

Demand forecasting supports corporate-wide planning activities

Level of Forecast Strategic( years)

Tactical ( quarterly)

Purposes

Business planning Capacity planning

Brand plans Financial planning/budgeting Sales planning Manpower planning

Tactical (months/weeks) Operational( days/hours)

Short-term capacity planning Master planning Inventory planning

Transportation planning Production scheduling Inventory deployment

Larry Lapide, 2006 Page 8

Operational Forecasts

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